GETTING READY FOR B2B

Byline: Holly Haber

DALLAS — For all the hype about the Internet revolutionizing the way companies do business, the apparel industry still is not wired for wholesale Web transactions.
Several such projects are in development, but few business deals are actually traveling over the Web, and that presents a ground-floor opportunity for a number of entrepreneurs out to develop sites for wholesaling apparel or sourcing production of clothing from factories around the world.
Four of these firms are Fasturn.com of Los Angeles, MarketMAX in Danvers, Mass., Tradeweave.com in San Francisco and Edaflow.com in Atlanta. Only Tradeweave currently has an operational site.
Sears Roebuck & Co. and Carrefour SA announced in February that they had linked with software giant Oracle Corp. to develop a Web-based marketplace for retailers. Called GlobalNetXchange, it is intended to be more efficient than cumbersome electronic data systems.
Tradeweave.com has set up an electronic auction house for unloading excess inventory and is constructing an online showroom complex. Fasturn.com proposes to connect manufacturers or retailers with factories around the world for sourcing.
MarketMAX is building Market4Retail.com, an online wholesale trade center that is an offshoot of its core business as a developer of software for merchandise planning, assortment and store layout. And Edaflow, a new name for the firm that previously sold junior and young men’s apparel on Hipo.com (which, according to its home page, has closed shop), says it’s developing a wholesale mart Web site for men’s wear.
Tradeweave.com is a subsidiary of QRS Corp., a pioneer in developing retail software for electronic data interchange that claims it did $135 million in sales last year. Tradeweave opened its doors last June and says it began handling electronic auctions of surplus apparel in January. However, it refused to give a reporter access to the system. The site also dispenses industry news and offers a directory of retail and manufacturer Web addresses. Revenue comes from a 5 percent transaction fee.
By July, Tradeweave.com plans to offer online vendor showrooms that give buyers the ability to order preseason merchandise and do collaborative assortment planning with resources. Orders through Tradeweave would be transmitted directly to the manufacturer’s computer through EDI — not by e-mail.
“We’re hitting the full life cycle of merchandising, from preseason planning through [managing] excess inventory,” asserted Andrew Sheehan, vice president of marketing.
He declined to reveal who is using the site currently, though Leslie Fay and Dillard’s have made public announcements supporting Tradeweave.com. The company is targeting 53 major manufacturers and retailers for its first rollout.
Fasturn.com proposes to link retailers or manufacturers with factories to produce apparel.
“The Internet cuts time and space,” asserted Frank Litvak, chief executive officer and founder of Fasturn Inc.
He added that the extremely fragmented apparel business, with buyers and sellers all over the world, long lead times and very little vendor differentiation, is “a perfect marketplace for the Internet. It allows people to communicate instantly with each other as opposed to running around the world.”
Fasturn is in testing mode and expects to open to the public in late spring. It has vetted and signed up more than 1,000 factories in 27 countries and more than 1,000 buyer members, Litvak claimed.
“We will assist buyers with procurement needs by introducing them to a worldwide network of suppliers or factories,” he said.
The way it works, a registered buyer logs onto the system and enters such product specifications as style, size and color. Fasturn then supplies a list of appropriate factories, and the buyer can call up detailed factory profiles. Once a manufacturer is chosen, the system can be used to negotiate the order, request samples and transmit images of the style. Fasturn also offers a progress schedule that provides updates on the work order. The buyer pays Fasturn a “few percent” of the order as a commission, Litvak said.
Fasturn’s manufacturing members will have the option of creating online showrooms to promote their wares or hawk excess inventory.
Litvak, who says he has started a string of technology companies, including a biotech medical device firm called Immusol, has hired several experienced industry players to manage Fasturn. The firm is backed by Silicon Valley venture capitalists, he added.
The executive team includes people who have held some high-profile jobs. President is Marilyn Tam, previously chief executive officer of Aveda Corp., president of Reebok Apparel Products and Retail Group and vice president of Nike. David McTague, former executive vice president of sales and strategic planning for the men’s division of Tommy Hilfiger, is senior vice president of sales. Janet Fox, previously a sourcing executive at J.C. Penney, is vice president of sourcing, and Jeff Streader, a former senior sales executive at Oxford Industries, is vice president of sales.
Market4Retail, a series of virtual showrooms, is focusing on apparel and accessories, athletic apparel and sporting goods and consumer packaging, according to Lori Schafer, president. But the firm’s ultimate goal is to sell everything from bananas to toothpaste on the Web.
Market4Retail was launched in January and has been in test mode with four retailers, she claimed. However, an official at Shopko Stores of Madison, Wis., which Schafer said was experimenting with the site, said the system was not in test mode yet, though it does intend to try it out. Schafer did not return a phone call seeking clarification.
“The concept is that suppliers can put their catalogs online and retailers can preview them before they go to look at the line,” explained Jo Martel, director of marketing. “It’s also a way for retailers to find new suppliers. They can type in key words, like pink scarves, and price points and the system will present all of the products that fit those characteristics.”
Suppliers pay $1,000 to $3,000 to set up a virtual showroom; the exact cost depends on the number of items to be shown. They also pay a subscription fee of $100 a month. It’s free for buyers to shop at Market4Retail.com, but the firm’s hope is that retailers will avail themselves of MarketMAX’s tool sets for an additional subscription fee. These include software programs that assist with assortment planning and store layout and would typically cost less than $100 a month.
Industry players, however, are skeptical that electronic commerce can succeed in the touchy-feely world of selling clothing.
“I think you lose something if you don’t get to touch the real fabric,” said David Dart, ceo of David Dart Design Group, a division of Kellwood. “It could work for something generic, like Levi’s. But in a fashion house, how could it be exciting?”
Howard Wolf, a sales representative of contemporary lines at the International Apparel Mart in Dallas, concurred.
“I don’t think they’ll do too much apparel online,” he commented. “How can a retailer buy it with the same taste and panache as sitting across the table from it? I believe that if you can do it on the phone, you can do it online, but you can’t do everything on the phone.”

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